Gold and the Euro: Metal vs. Money

Gold has now doubled since the Euro first got where it stands against the
Dollar today...

SINCE THIS decade's Dollar Decline first pushed the Euro above $1.35
in late 2004 - a level it reclaimed this week - the price of gold has gone
on to double for both US and Eurozone citizens.

American investors and savers would have been much better off Buying
Gold instead of Euros, in other words, as would everyone else. And looking
ahead, "These days, currency weakness, relative to other currencies, matters
less for gold," reckons Standard Bank's Walter de Wet.

"All major currencies are being devalued, and as a result - and on a relative
basis - currencies are trading in the same ranges seen before. However, these
currencies are weaker against tangible assets such as gold."

Euro @ $1.35

Dollar Gold Price

Euro Gold Price

Dec. 2004

$441

€329

April 2007

$681

€504

Oct. 2008

$900

€665

May 2009

$913

€670

The European single currency has in fact averaged $1.35 to the Dollar for
the last three-and-half years. Over that same period, gold has pushed up against
both, averaging $730 per ounce but standing higher today by one-quarter at
$925.

Sticking with the Dollar Down trend, "We expect the Dollar to depreciate to
$1.50 by year-end," Standard Bank adds. "As a result, the Gold
Price should rise." But by much exactly, if this relationship were to hold
good from here...?

Yes, the price of gold in dollars stumbles around the same path as the world's
No.1 non-Dollar money when priced in greenbacks. As our chart shows, in fact,
gold has loosely mapped the Euro (as figured back to 1979 via the Deutsche
Mark's pre-union value) for much of the last 30 years.

Dropping more than half their monthly average, for instance, as the "Super
Dollar" marked the global deflation of 1980-85 (or 'disinflation' if you prefer),
both gold and its European alternative swung higher...and then lower...to hit
bottom at the start of this decade. From there, they've both moved sharply
upwards again, breaking new all-time records above their old 1980 highs.

But as de Wet points out, the move in gold has been much swifter than the
single currency's gains. "There is better support for gold at the same Dollar/Euro
exchange rate," in short. And viewed across the last 30 years, the Gold
Price is holding one-third better than its previous high (monthly average).

Europe's official non-Dollar, in contrast, advanced only 4% to its new peak
of July 2008.

Formerly City correspondent for The Daily Reckoning in London and head of
editorial at the UK's leading financial advisory for private investors, Adrian
Ash is the head of research at BullionVault,
where you can buy gold
today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the
secure, low-cost gold and silver exchange for private investors. It enables
you to buy and sell professional-grade bullion at live prices online, storing
your physical property in market-accredited, non-bank vaults in London, New
York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people
from 97 countries used BullionVault,
owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical
silver (US$129m) as their outright property. There is no minimum investment
and users can deal as little as one gram at a time. Each user's unique holding
is proven, each day, by the public reconciliation of client property with formal
bullion-market bar lists.

BullionVault is a
full member of professional trade body the London Bullion Market Association
(LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious
Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development
body the World Gold Council (www.gold.org)
joined with the internet and technology fund Augmentum Capital, which is backed
by the London listed Rothschild Investment Trust (RIT Capital Partners), in
making an $18.8 million (£12.5m) investment in the business.

Please Note: This article is to inform your thinking, not lead it.
Only you can decide the best place for your money, and any decision you make
will put your money at risk. Information or data included here may have already
been overtaken by events - and must be verified elsewhere - should you choose
to act on it.